Amiesite Const. Corp. v. Luciano Contracting & Bldg. Co.

• Decision Date: 19 November 1940
• Citation: 30 N.E.2d 483,284 N.Y. 223
• Parties: AMIESITE CONST. CORPORATION v. LUCIANO CONTRACTING & BUILDING CO., Inc., et al.
• Court: New York Court of Appeals Court of Appeals

284 N.Y. 223

30 N.E.2d 483

AMIESITE CONST. CORPORATION

v.LUCIANO CONTRACTING & BUILDING CO., Inc., et al.

Court of Appeals of New York.

Nov. 19, 1940.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by the Amiesite Construction Corporation against the Luciano Contracting & Building Company, Inc., and others to recover for labor and materials furnished the named defendant in the improvement of a public highway. From a judgment entered upon an order of the Appellate Division, Second Department, 259 App.Div. 826, 18 N.Y.S.2d 873, affirming by a divided court the judgment of the Special Term in so far as appealed from, plaintiff appeals.

Judgment affirmed. James H. Cavanaugh, of Mount Vernon, for appellant.

Sydney A. Syme, of White Plains, for respondent.

RIPPEY, Judge.

The Luciano Contracting & Building Co., Inc., entered into a written contract with the State of New York, Department of Public Works, Division of Highways, on July 22, 1938, for the improvement of a public highway in Westchester county, entitled ‘Reconstruction of the Mamaroneck, White Plains State Highway No. 19, known as RC No. 2536.’ The improvement was completed and accepted by the State on November 30, 1938. At the time of the commencement of this action there was a balance due and unpaid to the contractor in the amount of $4,802.90. Those moneys were not in the hands of the contractor. Neither were they set aside and appropriated to the contract by the State.

The Amiesite Construction Corporation, by two contracts dated July 11, 1938, and August 17, 1938, respectively, agreed to furnish the labor, material and equipment to complete that part of the improvement contract relating to bituminous macadam at prices therein mentioned. No time for payment was specified. As the work progressed the bituminous material was furnished and laid as required. As of November 30, 1938, there was due and owing to the Amiesite Corporation $7,083.52. That corporation, appellant herein, has been awarded a money judgment against the general contractor for the foregoing amount, with interest from November 30, 1938, but has been denied a lien under section 5 of the Lien Law (Cons.Laws, ch. 33) upon, or preferential right under section 25 of the Lien Law to payment of, the unpaid amount due to the contractor. The time within which notices of lien might be filed expired on December 30, 1938, thirty days after the contract was completed (Lien Law, s 12). No notice of lien was filed at any time by the Amiesite Corporation.

On April 1, 1939, the plaintiff was notified by defendant Fiore that he held a written assignment, dated September 3, 1938, from the contractor of all moneys due and to become due from the State under the aforesaid contract and that he claimed the entire balance due, whereupon this action was commenced. The assignment was executed and delivered in consideration of moneys to be advanced to the contractor to be used by the latter in the performance of its contract with the State. Thereafter Fiore advanced to the contractor for that purpose before the contract was completed and on the security of the assignment $14,475, of which $8,143.70 was unpaid at the time the action was commenced. The assignment was filed with the Comptroller of the State on April 6, 1939.

The action is not one under the Lien Law to foreclose a lien and to establish the priority of plaintiff as a lienor. No such action would lie since plaintiff failed to comply with the provisions of the Lien Law requiring filing of a notice of lien. The obligation of the contractor to plaintiff was on an open account. Plaintiff was neither a judgment creditor nor an attaching creditor. Plaintiff alleges that the written assignment to Fiore was invalid under the Lien Law as against its claim since the assignment omitted the covenant required by section 25, subd. (5), and was not filed within the time required by section 16, and that, consequently, it must be given preference in the distribution of the balance due from the State under section 25, subd. (6), on the theory that the balance unpaid constitutes a trust fund in the hands of the State exclusively for the benefit of laborers and materialmen and others specified therein as against such an assignment. We agree with the lower courts that plaintiff cannot maintain its claim.

Section 25 of the Lien Law, by its express terms, provides the order for priority of liens and assignments and preferences to funds in the hands of the contractor under contracts for public improvements only in actions to enforce a lien. Subdivision (5) of that section provides that ‘every assignment of moneys, or any part thereof, due or to become due under a contract for a public improvement shall contain a covenant by the assignor that he will receive any moneys advanced thereunder by the assignee as a trust fund to be first applied to the payment of claims of subcontractors, architects, engineers, surveyors, laborers and materialmen arising out of the improvement * * * and that he will apply the same to such payments only, before using any part of the advances for any other purpose.’ Subdivision (6) declares such advances trust funds in the hands of the contractors for the benefit of the persons mentioned in the previous subsection (5) and makes application of those funds by the contractor for any other purpose, as does section 25-a, a felony. But those provisions of subdivision (5), by the express terms of the section, impose upon the assignee no ‘obligation to see to the proper application of the moneys advanced under such assignment by the assignee.’

Those provisions are for the protection of the persons mentioned in ...